No matter the nature of your business, you need to keep track of the products your firm has on hand. Keeping an accurate inventory is critical to lowering costs and providing a more streamlined operation. As a business owner, you can rely on traditional hand counting methods or institute some form of computerized inventory control. Both approaches have their benefits and drawbacks, and it is important to weigh the relative advantages carefully.
Speed and Efficiency
A computerized inventory management system makes everything from inputting information to taking inventory easier. Doing a hand count of inventory can take days, but with a computerized inventory management system, the same process can be done in a matter of hours.
Once the computerized inventory management system is in place, managers and workers can use it to automatically generate all kinds of documents, from purchase orders and checks to invoices and account statements. Managers can also use the system to automatically order products when they run low.
With a manual system, the data is only as accurate and up to date as the last hand count. With a computerized inventory management system, the management team can pull a report and instantly see how many units are on the floor, how many have sold and which products are selling the fastest.
Reliance on Technology
With a computerized inventory management system, the company is at the mercy of its technology. Outside factors like a power failure or the loss of Internet or network connectivity can render the system temporarily useless.
A computerized system alone does not ensure accuracy, and the inventory data is only as good as the data entry that created it. Companies that plan to use a computerized inventory management system need to have a system in place to validate their data and check the numbers reported by the system. A select hand count or targeted audit may be necessary to ensure the integrity of the system.
Risk of Fraud
Any computerized system carries the risk of intrusion, and with a computerized inventory management system comes the risk of fraud as well. A dishonest vendor could hack the system to receive payment for products never delivered, or a dishonest employee could redirect checks to themselves.
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